Highlights how job creators know what’s best for their employees and economic growth—not Democrats in Washington
At a Health, Education, Labor, and Pensions (HELP) Committee hearing today on labor relations at Starbucks, U.S. Senator Mitt Romney (R-UT) called out the hypocrisy of Washington Democrats like Senator Bernie Sanders—having never created a single job—who think they know better than business leaders what is best for their employees, their businesses, and how to best grow the American economy. Senator Romney also pointed out that it is purely in Democrats’ own self-interest to pursue every available avenue to extend unions, even if unionizing is against the interests of a company’s employees.
Full text of his exchange with Howard Schultz, Member of the Board of Directors and former CEO of Starbucks, can be found below the video,
Senator Romney: Thank you, Mr. Chairman and Ranking Member Cassidy. I recognize at the outset there’s some irony to a non-coffee drinking Mormon conservative defending a Democrat candidate for president in perhaps one of the most liberal companies in America. That being said, I also think it’s somewhat rich that you’re being grilled by people who have never had the opportunity to create a single job, and yet they believe that they know better how to do so and what’s best for the American worker and what’s best for the American economy—what’s best for growth.
I also think it’s rich to not recognize the extraordinary conflict of interest we have, which is our Democratic colleagues overwhelmingly get their campaign funds from unions and therefore would like to find every possible way to extend unions, even if an enterprise feels that it’s in their best interest to pursue a different course. Now, I know that there are a number of reasons why you might wish not to have union organization in your various enterprises.
At the same time, I agree with Senator Cassidy and with your own comments, Mr. Schultz, which is that that people have a legal right to form a union. There are some employers that are not good employers, and a union is necessary to protect the rights of those individuals, and that if any enterprise, including yours, has broken the law, that it should be held accountable for having done so.
The same time, there are legitimate reasons why an enterprise might choose not to become unionized. I first would note that within your company there are probably some stores that are union, some that are non-union. Do the non-union store employees get paid less than the union store employees?
Mr. Schultz: The starting wage has been the same. The only difference is the benefits that we created in May, in my understanding under the law, is that we were not allowed to provide those benefits to people who are organizing to join a union.
Romney: And so, in fact, the non-union stores are actually a little better of a total package than the union stores. Let me ask you another question, which is, just to make another point, and that is I wouldn’t understand why you would not want to have an adversarial relationship between the store manager and the employees that work there. I’d also understand that sometimes in some union enterprises there are work rules that prevent someone from going from a, let’s say, a barista to becoming a manager. And you’ve indicated that, if you will, career opportunities for people are enhanced when they’re able to move from position to position and become a manager. Is that a concern of yours?
Schultz: No. I mean, can I tell one story? And it happens to be in the state of Vermont. And I think this is indicative of the situation that we are currently experiencing. There’s seven stores in the state of Vermont that Starbucks has. Of the seven, one of them voted to join a union. This is an important fact—21 Starbucks people, partners work in that store. How many people do you think voted to either become a union or not? Take a guess.
Romney: Got me. I would presume the majority.
Schultz: When you hear the number, you’ll understand the problem. 21 people in the store. Six people voted. Six. Four voted to become a union and two voted for not. Now, I’m not saying why the other people didn’t vote. That’s up to the committee to decide. But you can imagine there’s issues going on in a store like that where people work close together and influence people to do one thing versus the other. But here’s the problem. Since that store, since six people voted to do the union, of the seven stores in Vermont, this particular store has twice the level of attrition, and the majority of the people have left the store, and the tension that exists in any store that Starbucks has since its individual stores voting in a small group of people. There is lots of issues that we are dealing with, and overall in the stores that have voted for union, about 300 are twice the level of attrition that we currently have in the 99% of stores that have not voted for union. But the Vermont thing is not a proxy. The Vermont thing is exactly what’s going on around the country.
Romney: Thank you. I appreciate that perspective. And I would just turn to one other point, which is we talk about corporate greed all the time as if it’s something brand new. Of course, profit, incentive, and greed has been there from the beginning of humankind. But there’s also union greed. Greed exists throughout our society, through various enterprises. But let me ask. Your company is highly profitable. It was profitable, I presume, very early on, became profitable as time went on. Where does all that profit go? Does it go to all pay you and the senior executives? Where does the profit go of an enterprise? Did it all go out in dividends or stock buybacks? Where has your profit gone over the history of your company?
Schultz: The majority of profits that Starbucks has made has gone back into infrastructure, roasting plants, $800,000 to $1,000,000 to build a store. The profits of the company have gone back to the business. Now, what’s most important, though, is when we create shareholder value, as we have for Starbucks through the years, our employees, our partners are sharing our shared success model in that profit because everyone has been an owner. And the first day that I came back—April 4th, 2022. The first day, what did I do? The one thing that would get shareholders across the country who owns Starbucks stock angry with Howard Schultz. And that is I stopped our buyback program on the first day. Our stock went down. I was not concerned about that. And I took that money and I invested it right back into our people, which resulted in higher wages one month after I came back. Now, that is the only evidence I have, which is the fact that my operating style, which has been 40 years, is to build a company that balances profitability with a level of shared success for our people, and we have the evidence to prove it sir.